OUR VIEW: ETHANOL WINS

SEPTEMBER 2012

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Our View: Ethanol Wins

(Posted Tue. Sep 25th, 2012)

By Garry Niemeyer, NCGA President -

 

Prices

 

Ethanol is a winner. This remarkable fuel, that happens to be made from corn, has been asked to be many things since it first emerged in the marketplace in the late 1970s. Remarkably, this domestically produced fuel has met all the challenges offered on every level.

 

Reduce our dependence on expensive foreign petroleum? Check! Improve air quality by reducing emissions of CO2 and greenhouse gases? Sure, why not? Revitalize our rural economy and help keep family farmers in business? Consider it done. Help meet all the goals of our nation’s blueprint for a successful biofuels initiative (RFS2)? Piece of cake.

 

And notably, ethanol is providing all these documented benefits with a prices tag that is cheaper than gasoline -- sometimes, like now, significantly cheaper.  Historically, the wholesale price of ethanol has been cheaper than wholesale gasoline prices. However, with recent soaring gasoline prices, the chasm has widened even further, creating margins for ethanol that have been more than 60 cents cheaper per gallon. According to CME Group, the world’s largest derivatives marketplace,  U.S. ethanol is now the lowest-cost motor fuel in the world.

 

According to the National Renewable Energy Laboratory, “ethanol keeps U.S. retail gasoline prices about 17 cents per gallon lower, leading to $24 billion in annual savings for drivers.”

 

In big part, this is why attempts from several quarters to stop ethanol’s growth and popularity have failed to date. This domestically produced juggernaut continues to chip away and grow market share. Sure, there have been times when the industry downshifted and the pace of growth slowed but the positive momentum is undeniable.

 

It’s time for the voice of reason to take over this dialogue. You should be skeptical if you have heard negative information about ethanol. Consider doing a little research so you won’t be manipulated by those who seek to benefit from damaging the ethanol industry.

 

If you want to know more, here are a few documented facts to take your thinking to the next level. On a cumulative basis, ethanol has accounted for 8 out of 10 new barrels of liquid fuel production from U.S. sources since 2005. Last year, the United States produced 332 million barrels of ethanol. Without this domestic production we would have needed to import an additional 477 million barrels of oil.

 

If a high performance fuel at a bargain isn’t enough, consider this: The Department of Energy pegs the cost of U.S. oil dependence since 1970 at more than $8 trillion. And the cost in human lives in the Middle East is staggering.

 

Don’t believe naysayers who think we can’t make enough ethanol to  reduce our dependence on finite and imported petroleum. U.S. ethanol production has grown from 42 million barrels in 2001 to 332 million barrels in 2011, according to the U.S. Energy Information Administration. In recent years, our oil imports have decreased from 60 percent to 45 percent.

 

The contributions of the ethanol industry to the U.S. economy are real. Ethanol plant spending for their operations for things like corn purchases, research and development, labor and construction supported $53.6 billion of the nation’s GDP in 2010.

 

And when it comes to reducing greenhouse gas emissions ethanol and ethanol blends are clearly better than gasoline, according to the Global Renewable Fuels Association.

 

Global ethanol production and use is estimated to reduce greenhouse-gas emissions by 100 million metric tons in 2012, according to energy experts. This is the equivalent of taking 20.2 million vehicles off the road.

 

If you asked the vast majority of consumers if they put a priority on having family farmers producing our food, feed, fiber and fuel, the answer would be a resounding “YES!”

 

Ethanol is a winner, and there are many more potential contributions to be made in the years ahead but we will clearly have to navigate continued rhetoric to reach our destination.